Bond bulls are drooling as ONGC plans to hit the debt market for the first time to raise as much as $5.2 billion to buy government’s stakes in HPCL and finance its projects.
Given the company’s credit metrics — it has 130 billion rupees ($2 billion) of cash on its books and a long-term rating that’s a notch above the government — the issuance will be bought by investors drawn to one of the world’s fastest growth rates and Prime Minister Narendra Modi’s economic policies.
“The sentiment is positive toward India and because the supply from Indian corporates is limited, there will be demand,” Rishabh Tiwari, a Zurich-based fund manager for emerging market credit at Swiss Life Asset Managers, said in an interview. “ONGC has strong credit fundamentals and the acquisition of HPCL will help it diversify into downstream refining.”
Despite entry of private and foreign players into the exploration sector, ONGC remains the mainstay of India’s energy security.